Entrepreneurial Planning — Entrepreneurship STD 12 Commerce — Question

Explain any two rules for goal-setting.

'Golden Sweets' was a partnership firm, owned by Swati and Sushma. 'Asam Sweets' was another partnership firm owned by Vipan and Pranav. Swati and Sushma were sharing profits in 1:2 ratio and Vipan and Pranav were sharing profits in 2:3 ratio. Both the firms were situated in a famous market of Guwahati and were doing competitive business. Pranav the partner of 'Asam Sweets' observed that many of their customers were from far off areas and if branches of ‘Asam Sweets’ are opened in other parts of the city, the firm may earn huge profits. Similar was the situation of 'Golden Sweets'. One day in a function at a common friends house, the partners of both the firms knew that the internal expansion of their respective firms will be costly. Hence, they decided about the merger of the two firms. For this purpose, they decided to meet again to finalise the conditions of merger. Finally, on 1.1.2016 their respective firms were merged and a new firm ‘Asam Golden Sweets’ was formed with all the four partners Swati, Sushma, Vipan and Pranav. Their new profit sharing ratio was 1:2:2:3. During the year ended 31.12.2016, the new firm opened four new branches in different parts of the city and earned a profit of 30% on sales.

1. Identify the type of merger adopted by the two firms and also give its meaning.
2. Also give the names and meaning of two other types of mergers.

Aarav, a small entrepreneur, is manufacturing portable electric iron for domestic use with the brand name 'P-IRON’.This iron is in great demand. He finds that the cost of production per unit of the iron is Rs.1,000 and he can sell the same at Rs.1,200 per unit. The competitors in the market are selling this type of iron at the rate of Rs.2,000. Aarav’s objective is not to earn profit in the short-run but to capture the largest market. His expectation is that the customers will be attracted towards the new brand because of low price.
Identify the method of pricing adopted by Aarav to capture the substantial portion of the market. Also, state any two advantages of this method of pricing.

Explain the legal formalities involved in forming a Hindu Undivided Family.

State five elements of business opportunity.

Who is a stakeholder?

Source of Finance
Money is Always a Problem
'Air India has defaulted on working capital loan interest payment of 200 crores due to the financial crisis that the airlines is facing' confirms Air India sources on 21st May, 2011. Air India has high-cost loans worth about 40000 crores.
Air India is facing a tight financial situation and is in talks with lenders to restructure its debt of ₹ 40,000 crores. The lenders have agreed to reduce interest rates on part of the debt that is linked to overseas borrowings. The future of the remaining debt is still uncertain, especially because lenders are seeking a conversion of their debt into equity or equity like instruments. This is perhaps the first time that the national carrier has defaulted on its payments to banks. Sources said the airline had approached banks for more loans but they have declined to help because of the airlines' poor financial health.
And they say 'finance is difficult for new entrepreneurs.......... Its always a major concern.

1. Air India' has high cost loans worth about ₹ 40,000 crores. From the above statement, identify the source of finance Air India.
2. Give one advantage and one disadvantage of raising finance through this source.
3. What will be the effect of conversion of debt into equity on the financial health of the company?

What is meant by ‘Capital Structure'?

Give the impact of quality on profitability.